Rice v. Louis A. Williams & Associates

• Decision Date: 13 September 2002
• Docket Number: No. 06-01-00140-CV.,06-01-00140-CV.
• Parties: Kimberly RICE, et al., Appellants, v. LOUIS A. WILLIAMS & ASSOCIATES, INC., et al., Appellees.
• Court: Texas Court of Appeals

86 S.W.3d 329

Kimberly RICE, et al., Appellants, v. LOUIS A. WILLIAMS & ASSOCIATES, INC., et al., Appellees.

No. 06-01-00140-CV.

Court of Appeals of Texas, Texarkana.

Submitted May 16, 2002.

Decided September 13, 2002.

COPYRIGHT MATERIAL OMITTED

James B. Lewis, Scott J. Davenport, Glover, Miller, Lewis & Prebeg, PC, John W. Stevenson Jr., John C. Schwambach Jr., Stevenson & Ammons, Houston, for Appellants.

Gregory R. Ave, Mark E. Smith, Josh M. Snell, Touchstone, Bernays, et al., Michael A. Hummert, Alexander N. Beard, Bishop & Hummert, PC, Dallas, for Appellees.

Before GRANT, ROSS, and CORNELIUS,^* JJ.

OPINION

Opinion by Justice ROSS.

Kimberly Rice, acting individually and as next friend of Kara Garrett, Gala Rice, and Kourtney Martin (collectively, the Rice Appellants), along with Tri-State Pipe & Equipment, Inc., Tri-State Exploration & Production, Inc., Tri-State Well Services, Inc., James Tellgren, and James Stuart (collectively, the Tri-State Appellants) appeal the summary judgment granted in favor of Louis A. Williams & Associates, Inc. (Williams) and Agnor Insurance Agency, Inc. (Agnor). Appellants sued Williams, Agnor, and Southern County Mutual Insurance Company,¹ contending they failed to provide the legally required amount of insurance for a tractortrailer owned by Tri-State Exploration and leased to Tri-State Well. With respect to Williams and Agnor, Appellants alleged causes of action for negligence, breach of fiduciary duty, and breach of contract. The trial court granted Williams and Agnor's motion for summary judgment, which was based on the statute of limitations.

On appeal, Appellants contend the trial court erred in granting Williams and Agnor's motion for summary judgment. They also contend the trial court abused its discretion in overruling their motion for a continuance and in overruling their objections to Williams and Agnor's summary judgment proof.

Factual Background

Appellants sued Williams and Agnor, alleging Southern County issued a commercial vehicle insurance policy with coverage up to $100,000.00 to Tri-State Pipe through insurance agents Williams and Agnor, through whom the Tri-State Appellants regularly purchased insurance. Before the policy was written, the Texas Railroad Commission issued a requirement that all commercial vehicles operating in Texas have minimum insurance coverage of $500,000.00. Later, Tri-State Exploration purchased additional tractor-trailers and obtained, through Williams and Agnor, an endorsement to Tri-State Pipe's policy that insured the additional vehicles for up to $100,000.00.

On May 15, 1995, one of Tri-State Exploration's tractor-trailers was involved in a major collision with the Rice Appellants. The Rice Appellants suffered severe and permanent injuries in the collision and sued the Tri-State Appellants for negligence. On May 22, 1995, Williams informed Tri-State Pipe that the coverage limit of its policy was $100,000.00 and that Southern County would not be responsible for settlement of claims or any judgment for claims in excess of $100,000.00. On June 9, 1995, Williams informed Stuart (the owner of the Tri-State entities) and Tri-State Pipe that "[p]reliminary indications are that [the Rice Appellants'] injuries, special damages and general damages could exceed the [$100,000.00] limit."

On July 24, 1995, Williams notified Tri-State Exploration that Southern County would not tender a defense to them in the Rice Appellants' negligence suit. In the same letter, Williams indicated Southern County would defend Tri-State Pipe and Tellgren (the driver of the tractor-trailer). On January 8, 1996, Williams notified Stuart that Southern County would tender a defense to him under a reservation of rights. On July 2, 1996, Williams notified Tellgren that Southern County would continue in his defense under a reservation of rights.

On August 20, 1996, Tri-State Exploration and Tri-State Well demanded Southern County provide them a defense in the Rice Appellants' negligence suit. On October 2, 1996, Southern County agreed, under a reservation of rights, to provide such defense under the condition that Tri-State Exploration and Tri-State Well pay half their attorney's fees. On May 22, 1997, Tri-State Exploration and Tri-State Well agreed to the terms proposed by Southern County, as indicated by their attorney's signature on a letter faxed to Southern County's attorney.

Beginning July 8, 1996, and culminating May 5, 1997, Southern County made four offers to settle the Rice Appellants' claims for $95,000.00, the amount remaining under the policy. Beginning July 19, 1996, the Rice Appellants rejected Southern County's settlement offers and demanded $495,000.00 to settle their claims. On July 11, 1997, the Rice Appellants obtained a judgment in excess of $2.25 million against the Tri-State Appellants, jointly and severally.

On September 6, 1996, while the Rice Appellants' negligence suit was pending, Southern County filed a declaratory judgment action against Tri-State and the Rice Appellants, seeking a determination of how much coverage was available under the policy. On August 19, 1998, the trial court granted summary judgment in favor of Southern County, ruling there was $100,000.00 available under the policy. The trial court also permanently enjoined Tri-State and the Rice Appellants "from filing any other claim or action against Southern County ... directly or indirectly, involving the insurance proceeds and claims at issue in this litigation or in connection with the underlying suit and/or the motor vehicle accident made the basis of the underlying suit." On December 2, 1999, this Court affirmed the trial court's ruling with respect to the coverage available under the policy, but held the anti-suit injunction was improper. Tri-State Pipe & Equip., Inc. v. S. County Mut. Ins. Co., 8 S.W.3d 394, 400, 402 (Tex.App.-Texarkana 1999, no pet.).

Appellants filed suit against Williams and Agnor on June 3, 1999. The trial court granted summary judgment on May 18, 2001.

Standard of Review

Williams and Agnor moved for summary judgment under TEX.R. CIV. P. 166a(b). To prevail on such a motion, the movant must establish that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. TEX.R. CIV. P. 166a(c). Summary judgment for a defendant is proper when such defendant negates at least one element of each of the plaintiffs theories of recovery, or pleads and conclusively establishes each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997). When reviewing a summary judgment, we take as true all evidence favorable to the nonmovant. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999). We indulge every reasonable inference and resolve any doubt in the nonmovant's favor. Id. On appeal, the movant still bears the burden of showing that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Id.

Because Williams and Agnor moved for summary judgment on the ground of the statute of limitations, they must have (1) conclusively proved when the cause of action accrued, and (2) negated the discovery rule, if it applies and was pled or otherwise raised, by proving as a matter of law there is no genuine issue of material fact about when Appellants discovered, or in the exercise of reasonable diligence should have discovered, their cause of action. See KPMG Peat Marwick r. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999). If Williams and Agnor established that the action was barred by the statute of limitations, Appellants must then have adduced summary judgment proof raising a fact issue in avoidance of the statute of limitations. See id.

The Limitations Periods

We first address the relevant limitations period for each of Appellants' claims. A cause of action for negligence is governed by a two-year statute of limitations. TEX. CIV. PRAC. REM.CODE ANN. § 16. 003(a) (Vernon Supp.2002). A cause of action for breach of contract is governed by a four-year statute of limitations. TEX. CIV. PRAC. & REM.CODE ANN. § 16.004(a)(3) (Vernon Supp.2002). Appellants contend a cause of action for breach of fiduciary duty is governed by a four-year statute of limitations; Williams and Agnor contend a two-year statute of limitations applies.

Before 1999, there was a split of authority among the courts of appeals regarding the applicable statute of limitations for breach of fiduciary duty claims.² In 1999 the Texas Legislature amended Section 16.004 of the Texas Civil Practice and Remedies Code to establish a four-year statute of limitations for breach of fiduciary duty. See Act of May 26, 1999, 76th Leg., R.S., ch. 950, § 1, 1999 Tex. Gen. Laws 3687.

Section 2 of the Act provides, "The intent of this Act is to clarify existing law by resolving a conflict in case law concerning the applicable statute of limitations for actions for fraud and breach of fiduciary duty." Id. at § 2(a). Further, the bill analysis for House Bill 2456 indicates the Legislature intended to codify the holding of the Texas Supreme Court in Williams v. Khalaf, 802 S.W.2d 651 (Tex.1990), that "Section 16.004 ... [establishes] a four-year statute of limitations for fraud and breach of fiduciary duty."³ Tex. H.B. 2456, 76th Leg., R.S. (1999).

Our research revealed no cases after Williams in which a court held fraud was governed by a two-year statute of limitations. But, as mentioned previously, there was a split among the courts concerning the statute of limitations for breach of fiduciary duty claims. Therefore, if the Legislature was attempting to resolve a conflict among the courts, as Section 2 of the Act amending Section 16.004 indicates, then it was most likely the conflict regarding the statute of limitations for breach of fiduciary duty claims the Legislature was attempting to resolve. Thus, the legislative history of Section...